Development as diffusion : manufacturing productivity and Sub-Saharan Africa's missing middle

Abstract

This chapter considers economic development of sub-Saharan Africa from the perspective of slow convergence of productivity, both across sectors and across firms within sectors. Why have “productivity enclaves,” islands of high productivity in a sea of smaller low-productivity firms, not diffused more rapidly? Three sets of factors are summarized and analyzed: first, the poor business climate, which constraints the allocation of production factors between sectors and firms. Second, the complex political economy of business–government relations in Africa’s small economies. Third, the distribution of firm capabilities. The roots for these factors lie in Africa’s geography and its distinctive history, including the legacy of its colonial period on state formation and market structure.